Steve: Would this tax qualify as a “bad tax”?

Stephen Harper claimed at the G8 summit that all taxes are bad taxes.

Politicians often speak in sweeping absolutes and we only learn of the exceptions after the fact. As such, I would like to know whether our esteemed Prime Minister would consider the following outcomes of this particular tax to be the product of a good tax or a bad tax;

- this tax achieved the polar opposite outcome of ALL of its stated goals and ostensible purposes

- this tax resulted in an overall loss of tax revenue to the Canadian government of $1.2 billion a year presently, soon to reach $7.5 billion a year, when it was claimed that this tax would increase tax revenue

- this tax has induced $100 billion of takeovers of Canadian companies, primarily by foreigners through means that avoid the ongoing payment of taxes in Canada by the new owners and load these businesses up with debt

- this tax caused Canadians to lose $35 billion of their retirement wealth, and the associated loss of some $8 billion in capital gains taxes by the Canadian government

- this tax caused a major slowdown in the drill rig activity in Alberta that persists to this day and brought Canada’s once vibrant IPO market to a virtual standstill.

- this tax eliminated an essential investment choice by Canadians saving for retirement, that was designed to make Canadians more captive to the investment wares of Canadian life insurers’ products, like Manulife’s Income Plus, that was not hedged by Manulife, bringing wanton and reckless systemic risk to that pillar of the Canadian marketplace.

- this tax increased the burden on social services provided by the government by those seniors who now find themselves with insufficient retirement income

- this tax created an unlevel playing field between the 75% of Canadians without pensions (who incur this new tax) versus the 25% of Canadians with pensions ( who do not incur this new tax)

- this tax does not get implemented until January 2011.

Therefore, it is incumbent on Stephen Harper to explain to all Canadians why this income trust tax of his is not being rescinded, in view of his “all taxes are bad taxes” dogma and the masochistic course that he has charted for all Canadians and especially those Canadians seeking to provide income for themselves in retirement after years of hard work.......and paying taxes, which in the case of income trusts are not being acknowledged by the Department of Finance when they conduct their fraudulent “tax leakage” analysis.

What would better qualify as a “bad tax” than an income tax on trust distributions that is being paid to the government at an average rate of 38% and is being valued at the rate of 0%, whose unfair treatment becomes the sole rationale for Stephen Harper’s SECOND tax at the rate of 31.5%, for a combined tax rate on retirement savings/investment in the Canadian economy at the rate of 62%?

Where is the good in that “bad tax”? Who apart from a handful of corporate CEOs and foreign takeovers artists was this tax ever intended for in the first place?

Bad tax meets bad politician, in the form of Stephen Harper.

Stephen Harper has some major explaining to do, or does he want to go down as Canada’s biggest hypocrite and incompetent ever?

Stephen Harper: World class buffoon

G8 Attack Reflects Poorly on Canada: Experts

by Jeff Davis
Embassy / Hill Times
Published July 15, 2009

Minutes before Mr. Harper was to address reporters for a final time at the end of this year's G8 summit in Italy, an assistant to the prime minister told reporters Liberal Leader Micael Ignatieff had suggested the G8 may soon be replaced by a new forum from which Canada would be excluded. When he appeared, Mr. Harper pounced on the comments, slamming Mr. Ignatieff for daring to imply Canada wouldn't be worthy of membership in influential fora.

"Mr. Ignatieff is supposed to be a Canadian," Mr. Harper told the media on Friday. "I don't think you go out and throw out ideas like this that are so obviously contrary to a country's interest and nobody else is advocating them.

"I think it's an irresponsible suggestion.... I would suggest he look carefully at these comments and withdraw those. Frankly, they'd be irresponsible coming from anybody, but they're particularly irresponsible coming from a senior Canadian parliamentarian."

As it turned out, the comments had actually been made by former deputy foreign minister Gordon Smith, now a professor at the University of Victoria. Mr. Harper, as has now been widely documented, was forced to apologize.

Although the misstep by the prime minister will likely make few waves with Canadians—most of whom are busy enjoying summertime—experts say it adds to a troubling pattern in Mr. Harper's approach to foreign policy. They say he seems content to miss opportunities to contribute to the international dialogue, instead commenting on internal, domestic politics that international journalists will have no interest in.

Last week's attack on Mr. Ignatieff is not the first time the Conservative government has broadcast attacks on their Liberal opponents from the international stage. At a climate change conference in Nairobi in 2006, then-environment minister Rona Ambrose told a room of international dignitaries that her government was appalled with the record of previous Canadian governments.

"When Canada's new government assumed office this year, we found an unacceptable situation," Ms. Ambrose said. "We found that measures to address climate change by previous Canadian governments were insufficient and unaccountable."

Ms. Ambrose's partisan attack surprised most observers and enraged the Liberals. Many criticized Ms. Ambrose for highlighting a negative and divided image of Canada at such a major conference. Attendees at the conference were reportedly surprised at the tone of her comments, and a Greenpeace Canada spokesperson called the speech "embarrassing."

For observers, it's the way Mr. Harper approaches foreign policy.

"Foreign policy is not [Mr. Harper's] main interest," said Errol Mendes, a professor of international law at the University of Ottawa. "It would be interesting to know how many average citizens of the G8 would know who our prime minister is, whereas they certainly knew who Trudeau was, even Mulroney. So the fact that he does not shine on the international stage does impact on us having profile."

Canwest News reporter David Akin said that when he follows the prime minister to such summits, the Canadian leader is so poorly known that photographers are constantly asking who Mr. Harper is.

Mr. Akin recalled that at the prime minister's first G8 Summit in St. Petersburg in 2006, Mr. Harper avoided the press for three entire days, even as every other G8 leader loudly trumpeted their messages to the international press gathered on site.

"He was so uncomfortable he was invisible, he physically looked smaller in that '06 summit...he seemed really out of his element," Mr. Akin said. "When you're travelling with him, there's never enough information about his activities, about who he's speaking to. The read-outs that we get from the PMO communications when he meets with other leaders are frustratingly bland and vague."

Journalist and author Andrew Cohen suggests Mr. Harper's performance and press coverage from the G8 may reflect Canada's diminished role in the world. Mr. Cohen questions what international issue Mr. Harper has associated himself and Canada with, and said it is not clear what it is that Canada is contributing.

"What struck me about this is that he was relentlessly and unnecessarily partisan," Mr. Cohen said. "And you wonder why he did it; it doesn't help him internationally and it doesn't help him at home...so why did he do it? Maybe because he just can't help himself.

"We will probably have to wait...before we ever know what kind of a prime minister he was in those summits, but my sense is if we were doing innovative things and we were as daring as once we were, we would know."

Shortly after Mr. Harper apologized for unfairly criticizing Mr. Ignatieff, saying "I regret the error and I apologize to Mr. Ignatieff for this error," his senior aide Dimitri Soudas also went to the press to apologize. Mr. Soudas, who has advised Mr. Harper since 2006, said he had passed on the erroneous information and advised the prime minister to comment on it in a press conference.

Despite Mr. Soudas taking the blame, a Canadian Press article compared Mr. Harper to a wolverine, whose partisan claws were viciously unleashed, the Toronto Star called the incident "a sour note on which to end the week," and Canwest News Service ran the headline "Harper's G8 performance scuttled by gaffe." Adding fuel to the fire throughout was Liberal Foreign Affairs critic Bob Rae who immediately issued a press release attacking Mr. Harper's leadership, and began fielding questions from reporters.

In the statement, Mr. Rae said the error "is reflective of the character of this Prime Minister who made the choice to continue his pattern of slinging mud at his opponents, this time on an international stage. It is no wonder that with this approach, Mr. Harper was shown to be out of step with his closest G8 partners on everything from climate change to African aid to the strategy in Afghanistan."

Whether or not Mr. Harper's misguided partisan tactics will cost Canada internationally remains to be seen, but for politics watchers in Canada, it reaffirms a negative image he's been trying to shake.

"Most people are paying very little attention," said Frank Graves, president of Ekos Research Associates polling firm, though he said he suspects Mr. Harper regrets the attack on Mr. Ignatieff, and the impression it may leave on the public.

"Why would he have offered up this gratuitous and what turns out to be erroneous critique of his competitor in Canada when he'd just done a reasonably good job otherwise?" Mr. Graves said. "That might reinforce this view that he has difficulty transcending partisan instincts."

mcollins@embassymag.ca

Harper’s “dumb” only serves to mask his inherent deceit

Today we have Jeffrey Simpson of the Globe and Mail opining that the following Stephen Harper pronouncement at the G8 summit is “one of the most stunning, revealing and, frankly, ignorant statements ever made by a prime minister”:

“You know, there's two schools in economics on this. One is that there are some good taxes and the other is that no taxes are good taxes. I'm in the latter category. I don't believe that any taxes are good taxes.” (Stephen Harper)

I made a similar observation myself yesterday on this same quote, and mused that Harper must be losing faith in his 31.5% tax on income trusts to be implemented in 2011 that destroyed $35 billion in Canadians retirement savings and which was premised on Harper’s blatant falsehood that income trusts cause tax leakage.

That said, I have to disagree with Jeffrey Simpson’s conclusion on a number of fronts.

First, this is not the most superlative ”dumb” thing that Stephen Harper has ever said. In my opinion, the single “dumbest” thing that Stephen Harper has said would be the following statement of September 15, 2008 in the midst of the 2008 election:

"If we were going to have some kind of big crash or recession, we probably would have had it by now.” That absurd statement was made just before the Globe and Mail endorsed Harper for Prime Minister in the last election, as if papers should be endorsing candidates in the first place?

Such a patently absurd comment is like the Pilot of Air France Flight 447 comforting his passengers mid-flight with the false assurance that: “This is your captain speaking. We have entered some severe turbulence. If we were going to have some kind of big crash or system malfunction, we probably would have had it by now.”

Harper’s pivotal false reassurance of the 2008 election even ranks ahead of this Stephen Harper false (as it turned out) assurance of the 2006 election:

“When Ralph Goodale tried to tax Income Trusts they showed us where they stood, they showed us their attitude towards raiding Seniors hard earned assets and a Conservative government will never allow either of these parties to get away with that.”

Second, I find it interesting that Jeffrey Simpson of the Globe, whose paper endorsed Stephen Harper for Prime Minister in the last two elections, would fixate on this comment of Harper’s from the recent G8 summit as if it were some epiphany about the Globe’s endorsed candidate. After all, Stephen Harper has made this “ all taxes are bad taxes” argument before, or does the Globe not perform research on the articles they write on things like tax leakage or the candidates they endorse? Evidently not, as this very comment was made by Harper in 2004 in which he stated on CTV News “ “I believe that all taxes are bad.” (Source Wikiquote).

Third, what Jeffrey Simpson fails to reveal in his analysis of Harpers comment of “ all taxes are bad” is that this is not an ideological view that Stephen Harper holds, as much as it is a means to deceive the voting public by espousing positions that resonate with the common man, and which are abandoned at whim when it comes time to actually implement policy by merely citing that “circumstances have changed”.

“Deceit” not “dumb”, is the most insightful revelation that is common to all of the above quotes from Stephen Harper and not the conclusion that Jeffrey Simpson gets diverted on about the virtues of one economic policy versus another. Virtually all of Stephen Harpers comments contain an element of deceit. This past week we observed Harper’s inherent deceit in action on several fronts. Harper claiming that he “consumed” the wafer at LeBlanc’s funeral, when clearly he did not, Ignatieff being vilified in the most partisan of ways on the world stage by Harper for things Ignatieff never said, and this absurd pandering comment of “all taxes are bad taxes”, from the very person who implemented the double taxation of retirement savings at a combined tax rate of 62% commencing in the year 2011. meaning it’s not too late to reverse that “bad” tax.

Deceit, not dumb is the greater revelation that is common to most all of what Stephen Harper has to say, as the man himself is inherently deceitful. His ideological pronouncements are nothing more than false assurances with a short shelf life. Borne of the moment, with no enduring properties or underlying principles to validate their existence in the first place. That is the revelation contained in this Stephen Harper quote that seems to be lost on Jeffrey Simpson.

In that respect, Stephen Harper is not much different that the Globe and Mail itself, who gleefully advanced Harper’s patent lie that income trusts cause tax leakage in a litany of slanted and commercially biased news articles over the past two and half years.

The only persons who can be accused of being dumb, are the readers of the Globe, who prove Mark Twain’s maxim to be true on a daily basis,

“If you don't read the Globe you are uninformed, if you do read the Globe you are misinformed.”

I have as much respect for Stephen Harper as I do for the journalistic integrity of the Globe and Mail. Both employ the tactic of “dumb” to mask their inherent deceit and hidden commercial agenda.

Has Harper lost faith in his 31.5% income trust tax?

Stephen Harper's interview with the Globe

"You know, there's two schools in economics on this, one is that there are some good taxes and the other is that no taxes are good taxes. I'm in the latter category. I don't believe any taxes are good taxes."

How the insurance industry guides government policy by fear mongering

Where did all the fear mongering on income trusts come from, if not the insurance industry and the good folks at Manulife and Power Financial, whose sales of inferior investment products suffered in the presence of income trusts, and who the insurance industry turned to the Stephen Harper government to eliminate........whereby Harper used the falsehood known as tax leakage.

Bottom line: Competition was stifled, investment choices were eliminated and billions were lost by millions to enrich the few who basically own Canadian politicians.

Here we learn from Bull Moyers of PBS how the US insurance industry had a campaign to discredit the concept of public health care in order to maintain their monopoly on health care:

Watch Bill Moyers here

More potential hypocrisy from the schizophrenic Harper government

Today we learn that “Ottawa eyes $3,500 'cash-for-clunkers' program”, in which Canadians will receive $3,500 to trade in their old cars to buy new ones, in an attempt by the copy cat Harper government to artificially inflate demand for new car sales, as the US and other countries are doing.. This incentive program is a flagrant abuse of tax payer money that (by definition) could be used for a plethora of more worthwhile programs, like helping people save for their children’s education etc etc, but now that the Harper government has a vested interest in the ongoing and immediate viability of GM and Chrysler, we have them contemplating measures that are completely counter to the measures they took a short two years ago, namely their much maligned Green Levy program

Two years ago I found myself looking to upgrade my 2001 GMC Yukon with the purchase of a factory ordered 2007 Chevrolet Suburban with the new fuel efficient E85 engine. I had negotiated the purchase of this vehicle from an out of town dealer with a signed agreement, but had yet to get my trade-in appraised, when all of a sudden I learned that Jim Flaherty had announced his Green Levy program that would have seen the purchase price of this vehicle increase by $2,000. I immediately called the dealer and informed him that my order should be considered null and void, if there was any possibility that I would pay any part of this new tax, especially given that Flaherty had exempted all the GM cars produced in his riding of Whitby-Oshawa on the premise that they incorporated this new E85 engine and exempted all pick up trucks produced in his riding as well, on which the Suburban is based and which are no more fuel efficient. And yet I was expected to cough up $2000 more for this vehicle, in order to subsidize someone else’s purchase of a Honda Fit or a Toyota Prius? Good for Honda and Toyota, bad for me and GM.

Why did the Harper government see value in standing in the way of my purchase of a new fuel efficient vehicle two years ago that would have cost me $2,000 for nothing, and now they want to throw $3,500 of taxpayer's money at me to do the very thing that they previously stood in the way of? Are these people schizophrenic, or what? Do they have a clue about what they are doing? Where is their guiding philosophy for these random acts of policy, apart from making it up as they go along?

This Green Levy was implemented (like the income trust tax) with ZERO consultation with stakeholders (since that would require the capacity on the part of Flaherty to both listen and understand) and was decried (like the income trust tax) by the domestic car manufactures as discriminatory to their business interests.

Fast forward two years and we have the very same government now contemplating a reverse policy to the Green Levy (the Green Bevy?) that would see taxpayers-at-large subsidize the car purchasers of others, to the tune of $3,500 per vehicle.

Taken alone, this might have been a defensible policy to have implemented, but on the backs of all the other measures using taxpayer monies to revive a moribund industry, this is reaching far beyond the point of absurdity, as Canadian taxpayers will now be fully engaged in the following automotive resuscitation efforts:

- Billions in “loans’ to GM and Chrysler that both Harper and Flaherty have publicly acknowledged will likely never get repaid.

- Billions to purchase the equity of GM and Chrysler that both Harper and Flaherty acknowledge will be a long time before we see any return on, if ever.

- The Government of Canada assuming the new car warranty obligations and liabilities of GM and Chrysler.

- Taxpayers picking up the complete tab for the under funded pensions of GM, with no change whatsoever to the pension scheme offered to GM workers on a going forward basis that got GM into this mess in the first place.

- And now the Harper government wants to use taxpayer money to artificially inflate the sales of new cars? Doing so would be an absurdity, and completely counter to any vestiges that are left to Harper’s claim that he is a free market Conservative. The Green Levy of two years will have done a complete 180.

Taken collectively, these measure already implemented by the Harper government to resuscitate the automotive industry, can be considered as “cash for clunkers”, namely billions upon billions for GM and Chrysler. Enough is enough. We don’t need another program that actually goes by that name.



Ottawa eyes $3,500 'cash-for-clunkers' program

Auto industry, U. S. incentives put pressure on Canada to offer trade-in money

By Renata D'Aliesio, Canwest News Service July 5, 2009 2:05 AM



Environment Minister Jim Prentice said Saturday he's reviewing whether Canada should follow the United States and several European countries in offering consumers a substantial financial incentive to scrap their clunkers and buy new vehicles.

Prentice said he's met with a number of auto manufacturers over the past few months to discuss the prospect of giving Canadians $3,500 to trade in their older, polluting vehicles.

Makers and sellers of cars have been aggressively lobbying Ottawa to adopt the measure, contending it will significantly boost sales in the sagging auto sector while reducing greenhouse gas emissions.

Pressure has mounted since U. S. President Barack Obama signed a "cash-for-clunkers" program worth up to$4,500 US into law last month.

However, Prentice said before making a decision on whether the federal government would adopt a similar incentive, he wants to evaluate the effectiveness of an existing program, which offers modest rewards that vary across the country.

In Alberta, drivers who scrap vehicles made in 1995 or earlier can get up to $490 for a bicycle, up to a year's worth of monthly transit passes, or $300 cash.

"We have a limited program that's in place now that was frankly put in place before the recession began. It was directed at getting clunkers off the road. It wasn't really designed as an economic-stimulus package," said Prentice, who was in Calgary for the annual Calgary Stampede festival.

Prentice suggested a decision on whether to offer clunker-driving Canadians more lucrative rewards to buy new cars will be made within 60 days.

He said the cost of upping Ottawa's enticement will play a significant factor.

The Harper Conservative government is forecasting a$50-billion deficit in its 2009-10 budget, which is rich with spending on infrastructure in a bid to stem job losses during the recession.

The U. S. government has authorized $1 billion US for its cash-for-clunkers program, which ends this Nov. 1, while Germany has budgeted five billion euros, or $8.1 billion Cdn, and recently extended its deadline to Dec. 31.

"It's an enormous public subsidy for the purchase of new cars," Prentice said. "That's been one of the issues is the extent of public dollars that we would want to put into incenting people to buy private automobiles."

Liberal Leader Michael Ignatieff expressed support Saturday for the program, as long as it was offered at the right price. He wasn't specific as to what he believes that price should be.

"Getting clunkers off the road might stimulate the auto market, but it has to be sensible," Ignatieff said in Calgary. "You've got to get the price right. You got to have an incentive to actually get the clunkers off the road, but you can't pour too much public money into it or other taxpayers have problems."

Some taxpayers have already taken issue with Ottawa's decision to give two faltering automakers billions of dollars.

Along with financial aid from Washington, General Motors Corp. is receiving $10.6 billion from Ottawa and Chrysler is getting $3.8 billion.

Sales of new vehicles in Canada through the end of May came in at 582,000 units, a 19.5-per-cent decline from the previous year.
© Copyright (c) The Edmonton Journal

Flaherty's failed game of income trust dominoes

This is a classic, that ranks with the purchase of Prime West Energy Trust by middle eastern oil company Abu Dhabi Energy or TransAlta Power Income Fund by Hong Kong billionaire, Li Ka Shing that displaced Canadian investors forced to pay a 31.5% tax, whereas foreigners and corporations using excessive debt pay zero.. Here we have Teck loading up with excessive amounts of debt to acquire Fording Canadian Coal Trust and displace investors whose investment in this income trust was broadsided by Flaherty’s income trust tax and laid vulnerable to takeover given the pending 31.5% trust tax. Unable to deal with this excessive debt level in light of the collapse in commodity prices for its core business, Teck then resorts to selling 17% of itself to China's $200 billion sovereign wealth fund. Does Flaherty ever think things through to their logical and predictable conclusion.


Teck Sells 17% Stake to China Fund for C$1.74 Billion

By Rob Delaney and Mark Herlihy

July 3 (Bloomberg) -- Teck Resources Ltd., Canada's largest diversified mining company, sold a 17 percent stake to China's $200 billion sovereign wealth fund for C$1.74 billion ($1.5 billion) to reduce debt.

China Investment Corp., also known as CIC, will buy 101.3 million Class B subordinate voting shares for C$17.21 each, Vancouver-based Teck Resources said today in a statement. Teck said the deal will give CIC a 6.7 percent voting interest.

Teck has sold assets to reduce debt after adding $9.8 billion of loans last year to buy Fording Canadian Coal Trust, a producer of coal used in steelmaking. Teck last year sold more than half of its coking coal production to Japan and Korea and recently started selling to China, the world's largest steelmaker.

``For a lot of people looking at Teck's financial situation, there was certainly no opportunity for them to grow organically in the short term,'' said David Davidson, an analyst for Paradigm Capital Inc. in Toronto, who has a ``buy'' on Teck shares. ``This opens it up.''

Teck rose C$1.49, or 8.1 percent, to C$19.99 at 4:30 p.m. in Toronto Stock Exchange trading, the biggest daily gain since June 1. The shares have more than tripled this year.

Scotia Capital advised CIC on the transaction.

Coal Demand

Teck is betting that a ``strategic partnership'' with China may help the company win a larger share of the country's coking coal imports, which may rise to more than 20 million tons this year from 3.2 million tons last year, Chief Executive Officer Donald Lindsay said in a telephone interview.

``That's going to grow significantly in the coming years because they're building very large blast furnaces on their coast,'' Lindsay said. ``This could help us with our metallurgical coal sales in the long term.''

China is seeking access to raw materials for metals production, such as iron ore and coal. Wuhan Iron & Steel Group offered $400 million for part of Brazil iron-ore miner MMX Mineracao e Metalicos SA last month. Rio Tinto Group last month scrapped a $19.5 billion investment plan from its biggest shareholder Aluminum Corp. of China.

Teck said May 27 it was in talks to sell coking coal assets to Chinese companies to help it reduce debt and sold $4.2 billion of bonds on May 5 to refinance short-term obligations.

Teck in April said it sold about 5.6 million shares of Kinross Gold Corp. for proceeds of about $101 million and agreed to sell its stake in the gold production from Cia. Minera Carmen de Andacollo to raise about $270 million.

Profit Falls

The investment by CIC follows a second quarter that analysts expect to be worse for Teck than the year-earlier period. The company's profit fell 30 percent in the first quarter because of lower copper prices.

``For CIC, it represents the opportunity to participate in the inevitable upswing in commodities, and for Teck, CIC represents a long-term, patient investor that can also provide assistance in its largest market,'' Scotia Capital, a unit of Bank of Nova Scotia, said in an e-mailed statement. The transaction is CIC's ``first major investment'' in a Canadian company.

Teck is forecast to report a 29 cent profit for the second quarter, the average estimate of 11 analysts surveyed by Bloomberg. The company's net income was C$1.12 a share a year earlier.

To contact the reporters on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net; Mark Herlihy in London at mherlihy1@bloomberg.net.